Is the most-watched stock Coinbase Global, Inc. (COIN) worth betting now?

Coinbase Global, Inc. (COIN) has been one of the most searched stocks on Zacks.com lately. So, you might want to consider some of the facts that could shape the stock’s performance in the short term.

Shares of this company have returned -9.9% over the past month compared to the -6% change in the Zacks S&P 500 composite. The Zacks Securities and Exchanges sector, to which Coinbase Global, Inc. belongs, lost 1 .6% during this period. Now the key question is: where could the stock be heading in the near term?

While press releases or rumors about a substantial change in a company’s trading outlook usually “trend” its stock and cause an immediate price change, there are always fundamental facts that ultimately dominate the take. purchase and retention decision.

Revisions to earnings estimates

Rather than focusing on anything else, at Zacks we prioritize assessing change in a company’s earnings projection. Indeed, we believe that the fair value of its shares is determined by the present value of its future earnings streams.

Our analysis is primarily based on how sell-side analysts covering the stock revise their earnings estimates to reflect the latest trading trends. When a company’s earnings estimates increase, the fair value of its stock also increases. And when the fair value of a stock is higher than its current market price, investors tend to buy the stock, causing its price to rise. For this reason, empirical studies indicate a strong correlation between trends in earnings estimate revisions and short-term movements in stock prices.

Coinbase Global, Inc. is expected to post a loss of $3.05 per share for the current quarter, representing a year-over-year change of -147.5%. Over the past 30 days, the Zacks consensus estimate has changed by -8.7%.

For the current year, the consensus earnings estimate of -$8.48 indicates a change of -158.5% from the prior year. Over the last 30 days, this estimate has evolved by -11.6%.

For the next fiscal year, the consensus earnings estimate of -$2.41 indicates a change of +71.7% from what Coinbase Global, Inc. is expected to report a year ago. Over the past month, the estimate has changed by +22.5%.

With an impressive externally audited track record, our proprietary stock rating tool – the Zacks Ranking – is a more conclusive indicator of a stock’s short-term price performance, as it effectively harnesses the power of earnings estimate revisions. . The magnitude of the recent consensus estimate change, along with three other factors related to earnings estimates, resulted in a Zacks #4 (sell) ranking for Coinbase Global, Inc.

The chart below shows the evolution of the company’s consensus 12-month EPS estimate:

12 month EPS

Revenue Growth Forecasts

While a company’s earnings growth is arguably the best indicator of its financial health, nothing happens if it can’t grow its revenue. It is almost impossible for a company to increase its profits without increasing its revenue for long periods of time. Therefore, knowing the potential revenue growth of a business is crucial.

For Coinbase Global, Inc., the consensus sales estimate for the current quarter of $914.92 million indicates a year-over-year change of -58.9%. For the current and future fiscal years, the estimates of $4.11 billion and $5.17 billion indicate variations of -47.5% and +25.7%, respectively.

Latest reported results and history of surprises

Coinbase Global, Inc. reported revenue of $1.17 billion in the last quarter, representing a year-over-year change of -35.2%. EPS of -$1.98 for the same period versus $3.05 a year ago.

Compared to the Zacks consensus estimate of $1.47 billion, reported revenue is a surprise of -20.59%. The EPS surprise was -665.71%.

In the past four quarters, Coinbase Global, Inc. has twice exceeded consensus EPS estimates. The company has exceeded consensus earnings estimates twice during this period.

Evaluation

No investment decision can be effective without considering the valuation of a stock. Whether a stock’s current price accurately reflects the intrinsic value of the underlying business and the company’s growth prospects is a key determinant of its future price performance.

While comparing the current values ​​of a company’s valuation multiples, such as the price-to-earnings (P/E) ratio, the price-to-sales (P/S) ratio, and the price-to-cash flow (P/CF) ratio , along with its own historical values ​​help determine whether its stock is fairly valued, overvalued or undervalued, comparing the company against its peers on these metrics gives a good idea of ​​the reasonableness of the stock price .

The Zacks Value Style Score (part of the Zacks Style Scores system), which pays close attention to traditional and unconventional valuation metrics to rank stocks from A to F (an A is better than a B; a B is better than a C; and so on), is quite useful in determining whether a stock is overvalued, correctly priced, or temporarily undervalued.

Coinbase Global, Inc. is rated C on this front, indicating that it trades at par with its peers. Click here to see values ​​for some of the rating metrics that led to this rating.

Conclusion

The facts discussed here and plenty of other information about Zacks.com might help determine whether it’s worth paying attention to the market buzz about Coinbase Global, Inc. However, its #4 Zacks ranking suggests that it could underperform the broader market in the short term.

Just Released: Zacks Top 10 Stocks for 2022

In addition to the investment ideas discussed above, would you like to know our top 10 picks for all of 2022?

From its creation in 2012 to 2021, the Zacks Top 10 Stocks portfolios gained an impressive +1,001.2% vs. +348.7% for the S&P 500. Now our research director has combed through 4,000 companies covered by the Zacks Ranking and selected the top 10 tickers to buy and keep. Don’t miss your chance to enter…because the sooner you do, the better your chances of winning.

See actions now >>

Click to get this free report

Coinbase Global, Inc. (COIN): Free Stock Analysis Report

To read this article on Zacks.com, click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Comments are closed.